Kelowna, BC – Trade uncertainty and geopolitical volatility are creating material headwinds, while resource, infrastructure and visitor-economy investment is opening selective opportunities across the region.
Commercial real estate across the Okanagan and BC Interior is being shaped by opposing forces in 2026. Trade uncertainty, uneven business confidence and high construction costs continue to restrain transactions. At the same time, investment in energy, mining, electricity and transportation infrastructure is creating new sources of regional demand.
The result is not a broad recovery. It is a two-speed market.
The Trump administration’s tariff policies remain a significant headwind for Canada. Sector-specific measures and uncertainty over North American trade are influencing decisions well beyond the industries directly targeted. For commercial real estate, the indirect effects may be more important than the tariffs themselves. Higher or less predictable costs for steel, aluminum, machinery and building materials can delay expansion and weaken development feasibility. Tenants become cautious about committing to additional space, lenders apply more conservative assumptions, and investors require a greater margin for risk.
Geopolitical instability adds another layer. Volatile oil prices increase transportation, construction and operating costs throughout a geographically dispersed region. They may also keep inflation and longerterm borrowing costs higher than the real estate industry would prefer. Conversely, stronger commodity prices and a renewed focus on Canadian resource security can support employment, contractor activity and industrial demand in resource-oriented communities and transportation corridors.
The most constructive counterweight is the emerging infrastructure and resource-investment cycle. Federal and provincial initiatives are prioritizing critical minerals, natural gas and LNG, electrical generation and transmission, ports, rail capacity and faster major-project approvals. Where projects proceed, demand extends into contractor yards, warehouses, equipment-service facilities, workforce accommodation, retail, hospitality and professional services. Kamloops, Prince George and northern service centres may experience the most direct effects, while the Okanagan may benefit through business services, investment and population movement.
Kelowna has also gained greater flexibility in meeting visitor-accommodation needs. Effective June 1, 2026, the Province exempted the city from the principal-residence requirement for short-term rentals, subject to municipal restrictions. This is not a citywide reopening to unrestricted Airbnb-style use. Principal-use shortterm accommodation is permitted only in approved buildings and designated short-term-rental subzones, while the principal-residence requirement remains elsewhere.
The change may restore capacity for tourists and people attending conferences, receiving medical treatment, completing temporary work assignments, or participating in education and training. It should also support restaurants, retailers, attractions and event venues. The longer-term test will be whether the policy can serve the visitor economy without materially reducing conventional rental supply.
Asset-class performance remains selective. Functional industrial property and serviced land retain appeal, but added inventory is giving tenants and owner-users more choice. Retail remains resilient in strong locations, although total occupancy costs are testing some businesses. Office demand is increasingly concentrated in efficient, well-located and move-in-ready premises. Multifamily and development land remain constrained by construction costs, financing requirements and slower absorption.
There is no single BC Interior market. Kelowna is influenced by tourism, healthcare, education, construction and professional services. Kamloops has stronger transportation and resource linkages. Prince George and northern communities are more directly exposed to forestry, mining, energy and infrastructure investment.
The defining theme for 2026 is selective opportunity under elevated uncertainty. Properties tied to durable local demand, productive economic activity and essential infrastructure should outperform. Those dependent on aggressive rent growth, inexpensive financing or speculative assumptions remain vulnerable. In this cycle, regional knowledge and disciplined underwriting matter more than broad optimism.
This column is intended as the first in an occasional series examining individual BC Interior communities and commercial real estate asset classes.
Tim Down, CCIM, RI | Commercial Real Estate Advisor, NAI Commercial Okanagan
